Retail analytics on the rise
Middle East retailers starting to adopt retail analytics says Booz & Co
Middle East retailers are gradually looking to retail analytics to improve their businesses, according to management consulting company Booz & Co.
Retailers in the region lag behind more mature markets, where analytics systems have been in use since the 1990s, the company said, but Middle East retailers are now seeking greater insight into business processes.
Growing competitive pressure and lingering economic uncertainty are driving initial deployments, Booz said, with businesses across all parts of the retail industry looking to use analytics in areas such as category management, new market analysis, inventory practices and response to competitors' moves.
"Some early retail analytics initiatives in the region, in particular in the area of category management, suggest double-digit growth opportunities in sales and high potential benefits on margins-between 1% and 5% of sales," said Gabriel Chahine, partner with Booz & Company.
While regional retailers may already have a substantial amount of data from point of sale (POS) systems, customer surveys, market research, and other sources, they do not yet have the tools or expertise to analyse it properly. Booz advises that they develop analytics gradually through limited pilot deployments, applying four principles, namely structure the capability around available customer data, implement gradually and don't overcommit to technology, institutionalise and formalise the use of data in business processes and across the organisation, and get executive sponsorship.
"It's important to realize that for retailers just beginning this journey, even relatively basic solutions can offer significant results," said Karl Nader, senior associate Booz & Company. "However, as retailer's system evolve toward more advanced forecasting and inventory policies, they will need to evaluate each subsequent wave of analytical development on its own merits and determine whether the investment continues to offer sufficient value.